Scenario-Based Risk Analysis in Securities Valuation for International Investment Banks
Scenario-based risk analysis framework,advocated by big international investment banks,incorporates scenario analysis into the risk assessment process for securities valuation.It guides analysts to fully identify risk factors that affect the future value of a company and to conduct in-depth analysis of how these risk factors affect the company's value in the best-,baseline,and worst-case scenarios,as well as the probabilities of each scenario occurring.This allows the investors to see the entire process of balancing risk and return.Currently,securities institutions in China have not formed a standardized risk assessment and risk disclosure paradigm in securities valuation,and domestic analysts do not share a common risk assessment method.They disclose boilerplate risk warning information in research reports without substantive analysis of potential risks.This paper compares the institutional backgrounds of risk assessment by domestic and international analysts,and examines the origin,theory,principles,content,and application of scenario-based risk assessment methods in securities valuation used by international investment banks.It can help improve the risk valuation system in Chinese securities industry,enhance the risk assessment capabilities and forecast quality of our domestic analysts,thereby improving the pricing efficiency of China's securities market,and preventing financial risks.
scenario-based risk analysisinternational investment bankanalyst research report
NETL
NSTL
万方数据
